Can I start a new business while I’m on furlough? Oh yes indeed! We’ve seen some fantastic businesses launched over the last year that have really worked during (and often because of) lockdown.
For many new business owners, it has given them the ‘escape’ they wanted from their 9-5. BUT (and it’s a big BUT), being in business for yourself isn’t for everyone. It can be very challenging at the best of times. However, while you are on furlough, you have the time and a safety net (income-wise), creating an opportunity that you may never have again.
Here are our top six tips on how to set up a side hustle or new business when on furlough from your “main” job:
1. Check your employment contract
Some employers will have a clause in their contracts that stops you from having another job or being self-employed when employed by them. Check your contract carefully, and discuss it with your employer if needed.
2. Consider your business ‘structure’
DO NOT FORM A LIMITED COMPANY right away, unless you understand the cost and record keeping implications.
For more info, see our
When you earn over £1000 from your new side hustle, you should register as self employed with the tax people.
3. Be clear on your product, service and pricing
- Do you clearly understand what you are selling, how to price it and the benefits to the customer/client?
- Can you explain what you do in a short statement?
- If someone asked the question ‘How much does it cost and can you explain exactly what I will get?’ – can you answer it easily?
Having often asked this question of new start-up business owners, it’s a big challenge for many of them. This lack of clarity is very common, and that’s a BIG problem when you are trying to find and communicate your value to customers/clients!
4. Just Get Going
Don’t sit on your hands. Start NOW, and learn as you go. You won’t get many chances to do this while having another income stream to support you.
We often see owners spending a lot of time on creating that ‘perfect’ website or marketing campaign, rather than just getting going and starting to trade.
Time will be an important factor, as the majority of owners find that it takes longer than expected to gain customers and clients, and furlough will be coming to an end soon.
Use this time wisely by getting going as early as possible!
5. Set some money aside for tax.
It is likely you will be using most or all of your tax-free personal allowance in your furlough pay. So, as a self-employed person, you should set aside around 25% of your profit for future tax bills.
Check out our blog on why the 25% set-aside is a good idea and how it helps plan for your tax bill.
6. Be consistent
From our experience working with small business, consistency is very important. Whether it’s financial planning or your marketing efforts, the consistency of repeating these key tasks regularly over time is critical to business success. For example:
- You might be amazing at planning your finances once at the early stage, but never reviewing them will cause you issues down the line.
- Sticking out a video a day on your social media for 2 weeks then grinding to a halt will likely not yield the results you are hoping for.
Showing up and doing the boring stuff regularly, is, in our experience, is what works well for successful new business owners. This can be a challenge with balancing home life and other work.
What’s the next step?
Hopefully, this has given you some food for thought. If you need help planning those finances or sorting out your new business structure, please do get in touch with the team. As an established independent firm of accountants, we can help you look at your business plan, discuss your options and help get you going!